When people were instructed to make origami and then judge their origami creations next to everyone else’s, they consistently rated their ugly folded paper sculptures as better than everyone else’s. When the same people were instructed to build simple Ikea boxes and then ask how much they’d pay for the boxes they built versus a prefabricated box, people consistently chose to pay more for their constructions.
Researchers Daniel Mochon of Yale and Dan Ariely of Duke call it the Ikea effect. When people make their own things, from artwork to Ikea shelves, they rate their creations as better than everyone else’s. However, more than ego is at play here, though there’s probably a lot of that. Norton also credits the sunk cost fallacy, which is when you spend money pursuing costs you’ve incurred. Ever had a project leader argue that it’ll just take a few thousand dollars more to recoup the losses you’ve incurred while creating the world’s first Steam-Powered Back-Scratcher? Sounds like the sunk cost fallacy got the better of him.
However, Mochon explains that the Ikea effect only came into play when his participants managed to complete their task. If they failed to finish building their boxes and origami train wrecks, they didn’t value their creations, suggesting that customers will only value do-it-yourself projects if they can actually do-it-themselves. We think they should call it the Ikea Returns effect.
